Diller's Home Services Bet Could Hit $1 Billion in a Few Years

  • HomeAdvisor investing aggressively in sales and marketing
  • IAC likely to provide additional funding to help with growth

HomeAdvisor, the online home services marketplace owned by Barry Diller’s IAC/InterActiveCorp, may reach $1 billion in revenue in the next three to five years, Chief Executive Officer Chris Terrill said.

“It all depends on what kind of investments we make and what sort of things we do over the next 12 to 24 months,” Terrill said in an interview to be aired Tuesday on Bloomberg TV. “We’re going to continue to invest aggressively. We’ve already put plans in front of IAC to push that investment case.”

Last year, IAC increased its investment in Terrill’s company by $120 million to be provided over the course of two years, focused on accelerating technology and product development, marketing and sales. HomeAdvisor is IAC’s fastest-growing segment and is seeking more capital, Terrill said.

The parent company is “very interested in putting more capital into this business and seeing us grow,” he said.

HomeAdvisor revenue increased 27 percent to $361.2 million in 2015, a jump from 18 percent sales growth in 2014, and the company reported $18.5 million in adjusted earnings before interest, taxes, depreciation and amortization, according to a regulatory filing.

Brand Awareness

The company will continue to expand in sales and marketing, he said, citing lack of awareness of the brand and the service as a key challenge. HomeAdvisor will spend $60 million on television advertising this year and plans to increase that to $80 million next year, he said. Spending on marketing on TV will flatten out in two to three years, and margins will improve as the customers acquired through advertising make repeat purchases, he said.

Skilled service providers -- from plumbers to roofers to landscape architects -- that pass a screening process pay a subscription fee to be a HomeAdvisor member and additional fees to contact potential customers found using the marketplace. About $30 billion worth of total home projects flowed through HomeAdvisor in 2015, which represents 5 to 7 percent of the total U.S. market, Terrill said.

IAC last year made a cash bid to buy competitor Angie’s List Inc. for $8.75 a share, which the consumer-review and listings website turned down. IAC was interested in Angie’s List for its high number of visitors, which included a lot of homeowners ready to buy a service, Terrill said. The idea was to combine the traffic from Angie’s List with HomeAdvisor’s on-demand and service-matching technologies.

“They decided that it wasn’t a fit for them, and so we go back to business as usual,” he said. “They’re in flux, they’re making a lot of changes and we’ll have to wait and see.”